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Markerstudy outlines its post-Brexit future

Ever since the Brexit vote, speculation has been swirling as to what the future holds for a number of leading insurers that enjoy operations in both the UK and the EU.

One such insurer is Markerstudy, the name behind brands including Zenith and Geoffrey Insurance, which has a foot in both camps – it has underwriting businesses based in both Malta, a fully-fledged member of the EU, and in Gibraltar, which has close links to the UK market. With that in mind, Insurance Business UK caught up with the company’s group underwriting director Gary Humphreys to find out what the future holds – and Humphreys admits the vote was a shock.

“We felt from the commentary and discussions that we’d had, that Remain would lead the way,” he said. “I think everyone did - that has been evidenced by the fact that the Leave campaign seemingly had no plan to implement once it won the vote. So I think it took everyone by surprise really.”

With several weeks having passed since the decision, Humphreys admits that the future is still hazy. However, he is resolute that the company’s UK offices will not be impacted.

“We’ll continue to be UK-based in terms of our operations,” he said.

“We don’t see that there is any need or benefit to moving operations but until there is some clarity over what will happen in the future we’re in a very difficult position to continue and plan ahead.

“Most of the business we write is in the UK and that will continue irrespective of Brexit so that’s not a concern but we do write some business around Europe and we do have the business in Malta that writes into the UK so they will be subject to whatever agreements the UK are able to negotiate with the wider European market. So there is some future uncertainty there - although it’s not too concerning at a top level. It only represents around 5% of our income so it wouldn’t be too disastrous if we had to stop.

“One of the benefits of being in the EU is the passporting rights which give you a platform to develop your business beyond the UK – and this could potentially be restricted for us. So the uncertainty is definitely not healthy.”

So while clouds continue to hang over major insurers, perhaps brokers, who operate on a more “on the ground” basis could assume that it’s business as usual? However, according to Humphreys there is likely to be an impact on brokers too.

“There is some potential fall-out,” he said. “The broker market is generally supportive of the MGA arena and a number of the MGAs that operate in the market currently have capacity sourced from the European market. In the event of a UK exit, this could lead to different trading operations or they may not be able to rely on that capacity going forward. So I think it does create some uncertainty.”

However, while brokers may have some concerns about Brexit, their fear about a threat from direct, online business appear to have quelled according to Humphreys.

“With the rush to aggregators and online journeys some of the public are looking to turn back to brokers for the genuine advice,” he said. “There is a plethora of products out there to choose from – and I think brokers are beginning to wager more on service and advice rather than just price. That will continue to allow them to maintain a good market share.

“In today’s market in the UK, it’s such a sophisticated market that the only difference between the products is the method of distribution. Most insurers that want to maintain a strong presence in personal lines have to support both channels. You need a direct offering because there will be some customers who want to buy online and don’t wish to have anything more than that; and then there are others who will happily continue to use a broker not just for personal lines but also for wider insurance support. You can’t ignore either distribution channel.

“There was talk that brokers would be wiped out but that just hasn’t been the case. There is a strong performance in both direct and broker business – and you ignore either channel at your peril. I think brokers accept that insurers have to have multi-distribution channels in the way that brokers have to have multi business partners and can’t support just a limited number of insurers. It’s all about offering the customer choice.

“We’re very clear to our brokers about what we do on our direct side and I think they understand that.”

Since the referendum on 23 June 2016, there has been a lot of uncertainty in many sectors, but for the UK's insurance and long-term savings industry, the largest in the EU and third largest worldwide, the shockwaves are likely to be felt for some time